The extreme heat and drought that have gripped much of Europe this summer could completely wipe out the region’s expected economic growth. This is according to a report by Reuters, citing a report from the Dutch bank Triodos.
Analysts estimate that the damage caused by the heatwave could reduce the European Union’s gross domestic product (GDP) by approximately 1 percentage point, equivalent to losses of $208 billion (€180 billion).
Key factors behind the economic downturn:
A fall in labour productivity. Reduced productivity due to extreme temperatures will be the main driver of losses and will reduce the EU’s GDP by approximately 0.6 percentage points.
A blow to the agricultural sector. Agricultural output is expected to fall by 3–7%.
Associated risks. Further damage will be caused by rising food and electricity prices, restrictions on electricity generation, and disruptions to road, rail and river transport.
France will bear the brunt of the impact. Repeated heatwaves could reduce its GDP by 1.4 percentage points, threatening to push the country’s economy into an annual contraction of 0.6 percentage points. Italy, Spain and Belgium will also suffer significant losses. At the same time, countries such as Poland, which experienced fewer extremely hot days, will feel the effects to a lesser extent.
Triodos’ forecast calls official expectations into question: the European Commission had previously forecast EU GDP growth of 1.1%, whilst the IMF had expected the eurozone economy to grow by 0.9%.
As reported by GMK Center, in May 2026, seasonally adjusted industrial production in the EU fell by 0.1% compared with the previous month, and in the eurozone by 0.2% month-on-month. On a year-on-year basis, industrial production in the eurozone fell by 1.2% in May, and in the EU by 0.3%.